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Nightly Business Report

News/Business. (2010) Amanda Gengler, Money magazine; Hilary Kramer, A Capital Research. New. (CC) (Stereo)

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PBS

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00:30:00

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mpeg2video

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Toyota 17, Cisco 7, Pfizer 5, Lahood 3, Wyeth 2, Johnson 2, Suzanne Pratt 2, Amanda Gengler 2, Goldman Sachs 2, Tom Hudson 2, Europe 2, Mcdonald 2, U.s. 2, Kramer 2, Susie Gharib 2, Kellogg 2, Walgreen 2, Taliban 1, Us 1, Afghanistan 1,
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  PBS    Nightly Business Report    News/Business.  (2010) Amanda Gengler, Money magazine;  
   Hilary Kramer, A Capital Research. New. (CC) (Stereo)  

    February 3, 2010
    7:00 - 7:30pm EST  

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captioning sponsored by wpbt >> my advice, stop driving these vehicles. take it to a toyota dealer because they believe they have a fix for it. >> susie: should you drive your recalled toyota? the transportation secretary said no, then yes. >> tom: we turn to the former head of the national highway traffic safety administration to help sort out the confusion. you're watching "nightly business report" for wednesday, february 3. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
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this program was made possible by contributions to your pbs station from viewers like you. thank you. >> susie: good evening, everyone. if you own a toyota on the recall list, is it okay to drive it, or should you park it? tom, americans are still puzzled thanks to some mixed messages today from the nation's transportation secretary. >> tom: susie, ray lahood told lawmakers in the morning that toyota owners should stop driving those cars. they were recalled due to sticky gas pedals. >> susie: but tom, lahood later back-pedaled on the advice. >> what i said in there was obviously a misstatement, what i
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meant to say, or what i thought to say was if you own one of these cars or if you're in doubt, take it to the dealer and they're going to fix it. >> susie: toyota says it appreciates the fact that lahood clarified his remarks, and the automaker repeated its advice to owners to take problem cars back to dealerships. so what do consumer advocates say about the recall controversy? we turned to one of the leading auto safety advocates, joan claybrook, former head of the national highway traffic safety administration. darren gersh began by asking her what drivers really to know about the recall. >> what they should know is what to do if this happens, if something goes wrong. and the most important thing to know is you put it into neutral and you do not turn the engine off if you do not have to, because when you turn the engine off you lose your power for the brakes and steering, and you never take the key out because that locks the steering wheel. >> reporter: there are two recalls that we're talking about here, one in november that involved a floor mat.
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and then the pedal issue, which was in january. the government has looked at some of the solutions that toyota has come up with, but traffic safety folks in the government say but we're still going to check out the electronics here. what does that tell you when the government says they're still investigating the electronics behind this acceleration issue? >> well, i think that's the right thing to do. i think that it's every appearance it is an electronic issue with the throttle in the vehicle that has the floor mat problem. >> toyota says i isn't. >> toyota says it wasn't, but but it's unclear exactly what they were refering to. because when they said it a couple days ago it was in the midst of the later recall which involved a mechanical fix. the pedal fix, right. and so i haven't seen anything that definitively says there's absolutely no electronic issue involved here. because in the recall dealing with the floor mats, this is
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the lexus, the camrys, some suv's and the prius, they're going to not only fix the floor mat, but they're going to install a brake override, as it's called, which is a software change which if there's a conflict between the accelerator, throttle and brake, the brake wins out and you can stop the car. right now a lot of cars have this, but the toyota vehicles do not. so they need to have something electronic to stop these vehicles from being runaway vehicles. >> reporter: you've been a long-time critic of the auto industry. and we're looking at this process here, i'm wondering, does something need to change about the way that we handle recalls? does this show that the system is in trouble, or is this a specific incident that's specific to toyota? >> no, i think that it's the recall process. the cop on the beat is the federal department of transportation, and they have to be tough and mean, even though they don't necessarily want to be.
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and when they are, the auto companies behave. the national life traffic safety administration and d. o. t. have subpoena authority, they can get information from the companies, from the suppliers, from the dealers, from the public, they can put out public notices, and they really didn't do most of that when they got really serious consumer complaints, they did investigations starting i think it was 2004, 2006, 2007, toyota came in and said no problem. and we want to keep a lot of this stuff secret, and so they closed these cases, and i think there were six of them. that was a big hit to d. o. t., that it needed to get back together on this. >> reporter: two people who are very familiar with and have worked inside the department and very familiar with the safety enforcement told me that toyota has been tough to deal with, tougher than the other auto companies. that it has a reputation for that. is that your experience and is that what you've heard? >> i think that all the companies are tough to deal with, but i do believe that
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toyota is very tough. and they are resistant to doing recalls, and they're very secretive and they request confidentiality all the time. and it's very hard to get them to do something they don't want to do, there's no question about it. >> reporter: under the law, my understanding is that companies have, can be a challenge for them to decide whether it's a defect or it's just engineering problem. is that something that needs to be clarified, in other word a defect has a specific meaning under the law, but companies can say this isn't a defect but we're going to fix it any way. is that something that congress needs to look at? >> no, it very clear. toyota came in on the floor mat issue and they said this is not a safety related defect, but we're going to do i any way. and we're going to obey all the rules and regulations that you have for carrying out a defect, but this is not a safety related defect. this is popy cock, and they should never have tried to get
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away with that. i think it just adds to their bad reputation in terms of dealing with them and their failure to admit that they had a problem. >> reporter: joan clay brook, the former administration of the national highway traffic safety administration, thank you for your time. >> thank you. >> susie: a footnote to our coverage of the transportation secretary's comments on toyota. the toyota dealer diane eastabrook spoke with in last night's program, kurt schiele, said he got many phone calls from panicked customers after lahood's mid-morning comments. the good news? schiele now has the replacement parts and his shop is installing them on customer's cars. >> tom: here are the stories in tonight's "n.b.r. newswheel". wall street's blue chips snapped a two-day winning streak as pfizer's disappointing guidance weighed on the market. the dow fell 26 points, the nasdaq rose nearly a point, and the s&p 500 down six points. cisco shares were moving higher in after hours trading. they popped over 3% on better than expected earnings and
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cisco's first year over year sales gain in more than a year. we'll have full details in tonight's "market focus". as ben bernanke was sworn in for a second term today, the federal reserve chairman said he was focused on protecting the agency's independence. bernanke said that independence is key to keeping monetary policy focused on the long-term interests of the american people, and not political whims. >> susie: you've probably noticed that the prices you're paying at the pump are holding steady these days. but can we count on them to stay that way? well, that all depends on what happens to the price of oil. and, as suzanne pratt reports, forecasts for oil prices in 2010 are all over the map. >> reporter: at this gas station in midtown manhattan, gas prices are among the highest in the nation. whether they spike even higher, head lower, or stay in the same range this year depends on who you ask. j.p. morgan's lawrence eagles expects crude prices, which dictate gas prices, to climb higher. that's after averaging between
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$72 and $76 a barrel in the first half this year. >> moving higher in the second half, up to $88 by the end of the year and moving appreciably stronger in 2011. >> reporter: for eagles appreciably stronger means as high as $100 a barrel. his price predictions are based on a bullish outlook for the global economy. a healthier economy should fuel a pickup in oil demand. >> the one thing that is absolutely essential, which our forecast is very much focused on, is that we continue to have strong developing economy growth, strong demand from asia in particular, but also the middle east is going to be a stronger consumer. >> reporter: deutsche bank's paul sankey also expects strong energy demand this year in the u.s. and abroad. but he thinks generous supplies will outpace demand. >> there's a lot of oil in inventory, there's a lot of oil stored at sea. additionally, we have some good
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supply growth projects coming particularly in opec itself. >> reporter: for sankey that extra supply means lower oil prices ahead. >> we've seen enough strength this year to date, particularly with the cold weather, to have some upside pressure on our forecast of $65 average for the year. but, certainly we are looking for prices to fall from here into the $60 range. >> reporter: for now, it appears that supply-demand fundamentals are fueling at least some price forecasts. of course, it's still possible that mother nature, geopolitical events, or speculators could make the forecasts fuzzy. suzanne pratt, "nightly business report", new york. >> tom: still ahead, hilary kramer is back as our "street critique" guest. and she's got some stock recommendations she says can make you money, even in this turbulent market.
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>> susie: tom, they say all good things have to come to an skpend that's what happened here at the exchange today. so the markets were down. what were weighing on the markets? >> tom: well, certainly a lot of things were weighing on the markets, let's take a look at that market focus this evening. >> tom: worries about drug sales weighed on the market today. not so much the latest quarterly results, but concerns about revenue next year. but after the close, cisco systems turned in a better than expected financial report card, putting tomorrow's focus on tech. let's take a look at the cisco
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numbers. profit jumped to 40 cents a share, up from 32 cents a year ago, and seven cents better the expected. a few noteworthy items from cisco's fiscal second quarter: the quarter includes the first three weeks of january, the only major technology firm to include january in this round of quarterly numbers. and its quarter also saw the first year over year revenue growth since the fall of 2008. revenue came in at $9.8 billion, up 8% from last year. and c.e.o. john chambers says the firm saw across the board acceleration, meaning sales growth across almost all of its businesses. cisco stock caught a small bid after the close, up about 3%. it was very active ahead of the results, trading about one and a half times normal volume. before cisco, though, it was a disappointing outlook from drug giant pfizer that helped sour the market today. falling more than 3% today was enough for pfizer to be the biggest percentage loser of the dow industrials.
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the stock has matched its 2010 low hit just last week. here are the numbers. profits were helped out considerably from a year ago thanks to pfizer's buyout of wyeth. but the 49 cents a share wasn't enough to beat forecasts. more of a concern was pfizer's 2010 guidance, which was below estimates. and the firm dropped its 2012 predictions it made back in the fall with the wyeth deal. the news hurt other big branded drug makers. merck was the second biggest percentage loser of the dow today. remember, merck bought schering- plough to boost its drug development pipeline. johnson and johnson was fractionally weaker. its 2010 guidance last week was in line with expectations. the pharmaceutical exchange traded fund that includes pfizer, merck, and jnj dropped on lighter than average volume. meantime, the pharmacy business at walgreen's suffered from a mild flu season. the company reported an unexpected 1.1 drop in january sales at stores open for the
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past 12 months, including a drop in the highly profitable pharmacy sales. investors dropped the stock, pushing it down to september lows on almost four times normal volume. the monthly sales disappoint is walgreen's second in two months. we reported on toyota's latest troubles today on capitol hill. on wall street, the stock continued to drop. this stock was in the mid 80s before the massive recall announcement last week. today it dropped below $72 a share for a time. the company has lost more than $20 billion of market cap value in a week. western union failed to deliver and the stock hit the skids on very heavy volume. it normally trades about five million shares. today more than 50 million traded as it dropped almost 9%. the company's 2010 forecast was a disappointment. that guidance came after western union posted a drop in quarterly profits from a year ago and matched expectations. regional bank p.n.c. was the
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second most active stock on the big board, dropping by almost 2%. the bank will sell $3 billion worth of stock and issue new debt to pay back tarp. tomorrow, consumer stocks with earnings from clorox, kellogg, and sara lee. and that's tonight's "market focus". >> susieyahoo is selling its online help wanted site hot jobs to rival monster worldwide. the price tag, $225 million in cash. the deal is yahoo's latest move
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to dump assets that aren't doing well and focus on its web properties and advertising business. as part of the deal, monster.com will give yahoo job listings and other material on employment. monster hopes to take control of hot jobs by this fall. >> tom: tonight's "street critique" guest says look for winning stocks in a choppy market. she's hillary kramer, at ang capital research. welcome to the program. stocks took a hit in january. any sense that there's a change in momentum? >> there's volatility, that's what we'll continue to see. as long as we have regulatory proposals that create these knee jerk reactions from the market and also we don't know what will happen in a political way globally in the middle east as well. the earthquakes, for example. >> tom: certainly plenty of uncertainty out there. you brought some new stock picks, beginning with dendria.
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>> to me it a blockbuster, it a new way to treat cancer, on may 1 the f.d.a. will decide whether or not dendreom's vaccine for prostate cancer will be approved. if it is we're talking about a billion in sales next year, but it's also such a breakthrough and could apply to other cancers as well. >> tom: seems like there's a big risk if the f.d.a. doesn't approve it, if you're looking for a port in a storm in a choppy market is this the one? >> it's the biggest position in my portfolio. the da that that has come out is so compeling and it's increasing life by four and a half months which is incredible in the world of oncology today. >> tom: going from biotech to mcdonald's here, the stock is close to new highs. >> mcdonald's is a great bet for anyone's portfolio, it all about value, right, the consumer is cash strapped and you're talking about a big global play where mcdonald's
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is finally is understood around the world and here they have an advertising campaign that's stressing the dollar breakfast. goldman sachs just upgraded it to their conviction buy list today. >> tom: you were ahead of goldman sachs on the pick. you like the market itself, this being the nasdaq, is this a volume play on trading volume? >> it is, absolutely, especially because nasdaq has such a presence internationally in europe, for example, the majority of refuse enoughs are coming from europe, options, derivatives, and i love their squo, he's a real leader and understands technology as a tool for making money and improving margins. >> tom: and yahoo, we mentioned earlier that yahoo is selling hot jobs to monster, 225 million dollars. do you support that kind of diversification that asset sale? >> absolutely, especially because of the timing in this market with unemployment. the real unemployment being close to 20%.
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but yahoo has incredible value in china. if you look at some of the parts, yahoo is very under valued and it a company that reaches 10 to 14% of every single internet user. >> tom: why yahoo over google? >> it's a value play, and who knows who yahoo will continue to hook up with. >> tom: we last saw you on december 30, you had a trio of picks for us back then. a generic drug play, image products company, and an energy monitoring technology firm. some mixed performance for these three. do you still like them? >> i lime them all, teva especially. that's the direction we're going. goi, especially geoy, that's one satellite imaging, whether it's afghanistan finding caves and taliban, or in haiti the tech. not was used there to find survivors of the earthquake. >> tom: any new positions in
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telvebl? >> i'm holding steady with, but i still believe in it. >> tom: any ownership positions? >> i own dendreon, i took a position since september 30 in goi and telvent. >> tom: hillary kramer, chief investment officer as ang capital research. >> thank you, tom. >> susie: here's what we're watching for tomorrow. another big day of quarterly results, we'll hear from burger king, glaxosmithkline, kellogg, master card, and royal dutch shell. also on tap, january chain store sales and december factory orders. and with the super bowl just days away, there's big demand for the hottest tickets of the year. we'll show you who's supplying them, legally. >> susie: the lights have dimmed on movie gallery. the owner of the hollywood video movie rental chain filed for bankruptcy protection. it's the firm's second chapter 11 filing in the past three years.
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it means the end for 800 stores, or a third of its u.s. locations. 19,000 employees could also lose their jobs. movie gallery and rival blockbuster been struggling now that consumers have more viewing choices like netflix mail order service and kiosk operators like coin star's redbox. >> tom: wal-mart is cutting about 3% of its staff, or about 300 jobs at its arkansas headquarters as it cuts costs. the positions being jettisoned come from its legal, finance, and human resources teams. last month, the company said it would cut more than 12,000 jobs from its sam's club division. in a memo to employees, chief executive mike duke hinted today's job cuts may be the last ones for a while.
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>> susie: home equity loans are making a comeback. from the "money file" tonight, why having one is a good safety net. here's amanda gengler, writer at money magazine. >> during the real estate boom, thousands of americans paid for extreme kitchen makeovers and other renovations by taking out a home equity line of credit, also known as a heloc. but then came the housing bust and credit crisis, which shut down that heloc party pretty swiftly. most lenders stopped issuing new ones, and homeowners who already had them saw their lines cut or frozen. but don't give up on the home equity line of credit just yet.
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as housing prices and the economy begin to stabilize, many lenders are writing lines again. they're not the unbelievable deals they used to be, but they can still be a relatively cheap way to borrow. for example, it can be wise to pay for a new car with funds from a heloc, since some auto loans charge far higher interest rates than helocs do. small business owners often use them as a business line. it is okay to tap them for home projects that are necessary, something like a roof replacement. and in an emergency, they're a far better source of cash than your credit card. so it can be smart to have one just in case. if you wait to put in the application until you actually need the money, say, maybe you lose your job, you may not be approved. so apply while you still have a steady income. of course, not everyone will qualify. to be one of the lucky ones today you'll need solid credit and at least 20% equity in your home. and, finally, since many economists believe home prices have further to fall, don't borrow the maximum you can. i'm amanda gengler.
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>> tom: finally, the "walking man" strutted his way into the record books today. the life-size bronze sculpture by alberto giacometti sold for more than $104 million in london. that makes it the most expensive work of art ever sold at auction. the seller was a german bank which bought the piece last year. sotheby's had expected it to only fetch $29 million, although it's considered to be one of the most important by the swiss artist. the buyer, as you might expect susie, remains anonymous. >> susie: when they say the stock market does that well, it could be a good sign for the stock market. so 104 million. >> tom: certainly one to watch here. that's it for this evening "nightly business report" this wednesday february 3. you can read econo blogger terri cullen's take on paychecks and savings on our website. she says both are going up, but not for the reasons you think.
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it's at pbs.org/nbr. i'm tom hudson, goodnight everyone and goodnight to you too, susie. >> susie: goodnight, tom. i'm susie gharib. goodnight everyone, we hope to see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible
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by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org
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